Rates hike destructive, says owner of rental apartments

This rental property is facing a rates hike from $17,000 to $45,000. Photo/Stuart Munro

Converting a Wanganui motel into long-stay rental apartments has thrown up an anomaly in the city's rating policy that will be reviewed.

Auckland lawyer Kevin Martin owns 16 Alma Rd - formerly the Wanganui Motor Lodge - and appeared before the Wanganui District Council's audit, risk and finance committee to argue that the change of use had brought about what he termed a "destructive" rates hike.

Mr Martin said because council had decided to rate the complex differently, his business faced a rates demand that had risen from $17,000 a year to $45,000 a year.

He said it was "devastating" to receive that notice.

"Plainly the rents cannot be put up correspondingly [because] these are controlled by the market," he said.

"For council to decide at the stroke of a pen that this property should return to the council $45,000 in rates, leaves the owner in a hapless position."

Mr Martin said he had bought the business in 2007 when it was then running as a motel but leased out to another party.

He then bought the lessees out and given the downturn of business at the time, turned the motel into an apartment complex, spending about $1.6 million developing the property.

Most of the units now being let were single or studio units so the use of the complex has not changed in terms of intensity. The only change was that tenure of rental was longer.

"I'm mindful of the need for a rates burden and we're prepared to pay our share. But we expect it to be fair," Mr Martin said.

He said a $45,000 rates demand represented 20-25 per cent of the maximum revenue the property was capable of producing, assuming every unit was fully let every day.

"For council to simply demand such a sum because it has the power do so is viewed as grossly unfair and unconscionable," he said.

Julian Harkness, council's finance and corporate services manager, told the committee council needed to get a "tighter" definition of how properties were being rated.

The committee recommended that the definition and ratings policy for multi-use accommodation blocks be included in council's upcoming revenue and financial policy review.